Do no evil …drafting

Four_wise_monkeysEarlier this week, Google invited us to sell them our patents. In their words, “the Patent Purchase Promotion is an experimental marketplace for patents that’s simple, easy to use, and fast.”

Apparently, selling your patents (but only your US patents) to Google will ensure that the patents don’t end up in the hands of “patent trolls”. All transactions are to be handled in a standardised way, using a Patent Purchase Agreement whose terms can be found here. In FAQs that accompany the promotion, Google declares:

…we aren’t going to negotiate with anyone. You set the price, we set the terms, and if things work out, we get you paid by the end of summer.”

Others have commented on whether you should take Google up on their offer, eg see this article: Google Says Trust Us and Sell Us Your Patents. (IP Draughts has just mis-typed this in a Google search, and found some web pages on the subject “Google Says Trust Us and Sell Us Your Parents”, which is quite a different promotional opportunity.)

Google asks us to remember that:

…this program is an experiment (think of it like a 20 percent project for Google’s patent lawyers)

And they emphasise that:

There’s some fine print that you absolutely want to make sure you fully understand before participating, and we encourage [you] to speak with an attorney.

So, what does this attorney think of the fine print?

The drafting of the Patent Purchase Agreement is so “experimental” as to make IP Draughts suspect that the promotion is not serious. It shows signs of being a rush job, performed by incompetent staff. Let’s be slightly charitable and say that the patent department didn’t have time to involve the legal department in the drafting. IP Draughts suggests a new research project for Google’s “patent lawyers”: learn how to draft contracts. Note to IP Draughts’ staff: if you ever draft something as terrible as this document, you won’t have a future with the firm. Yes, it really is that bad. Let’s take a few examples. Each one on its own might not be a sacking offence, but cumulatively they amount to gross misconduct.

  • the missing “not”

Agreement NonTransferable. The Seller may assign or otherwise transfer this Agreement, or any rights or obligations under this Agreement, to any third party without the prior written consent of Google.

  • the missing sentence

Governing Law; Venue/Jurisdiction. This Agreement will be interpreted, construed, and enforced in all respects in accordance with the laws of the State of California, without reference to its choice of law principles to the contrary. Seller irrevocably consents to the jurisdiction and venue of the courts identified in the preceding sentence in connection with any action, suit, proceeding, or claim arising under or by reason of this Agreement.

  • cutting and pasting text from another document. Badly. Eg section 5.1, which refers to the “Delivery Date”, or section 5.2 which refers to the “Closing” and the “Closing Date”. In all of these cases, IP Draughts suspects that the defined term “Effective Date” may have been what the drafter intended to use, if he had taken the time to clean up the draft.
  • double definitions, and confusion over whether the defined term should be “Seller’s Patent” (section 1.1) or “Seller’s Patent(s)” (section 2). This mental confusion results in some horrible phrases, such as “any of the Seller’s Patent”.
  • misuse of defined terms, eg section 6.6, which should refer to “Seller’s Patent” not “the Patents”
  • turgid or error-strewn drafting, eg:

…necessary or desirable for effecting completely the consummation of the transactions contemplated hereby

…represents and warrants to Google as follows that as of the Effective Date and as of Closing

  • use of the future-perfect tense (for goodness sake) and multiple verb pile-up:

Upon the Effective Date, Seller …shall have caused its Affiliates to sell, assign, transfer and convey to Google …

  • incorrect cross-references, eg section 7.2 cross-refers to section 3.4, which doesn’t exist.

The above examples focus on mistakes and the very worst kind of drafting. The document also contains plenty of examples of drafting that IP Draughts considers to be unacceptable, but not quite as bad as in the bullet points above. In the following examples, the point that (most) concerns IP Draughts is highlighted in bold text:

restrictions and encumbrances including without limitation any pledge, charge [etc] …or other restrictions and encumbrances (collectively, “Restrictions and Encumbrances”)

The Seller’s Patent has never been found invalid …

NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR IMPUTED) … FOR COVER OR FOR ANY INCIDENTAL…

And there are plenty more.

There are also points of substance in the agreement that should concern any seller. Some of these indicate half-baked thinking on the part of the drafters, including the ridiculously elaborate warranty in section 6.3 which provides that, in respect of any licenses that the seller has previously granted under the patent:

…each such license is nontransferable (except solely in the context of acquisition of the respective licensee and in that case, the scope of each such license or rights in the Patents is limited to the activities of the licensee prior to the acquisition)

Or the provision that the seller can inform its existing licensees that it has sold the patent “provided that the Seller shall not identify Google”.

In its FAQs and other documents describing the promotion, Google emphasises “simplifying the process”, “better experiences for sellers”, “removing complications”, and “keeping it simple”. Yet the core document of the transaction fails to live up to these ambitions. This just doesn’t make sense. IP Draughts’ conclusion is that Google isn’t serious about this exercise, and that it has been dreamt up as a PR stunt on short notice. Either that, or Google’s competent contract drafter(s) didn’t get the memo.

 

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Filed under Contract drafting, Intellectual Property

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